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Outsourcing of surveillance now big business

Dependency on contractors rises alongside ballooning budgets

Fri, Jun 14, 2013, 01:00Updated: Fri, Jun 14, 2013, 12:01

Ines Novacic

Protesters demonstrate in support of Prism whistleblower Edward Snowden outside the US consulate in Hong Kong yesterday. Bobby Yip/Reuters

The controversy over the US’s Prism surveillance programme has thrown new light on the extent to which that country relies on private sector employees to carry out its intelligence work.

Intelligence experts say cause for particular concern is the notion that a modern government spy such as Prism’s whistleblower Edward Snowden is not part of the government workforce at all.

“The main problem is that through the years the government has become used to outsourcing intelligence work to federal contractors,” said Scott Amey, director of contract oversight investigations for the Washington-based watchdog Project On Government Oversight.

Since the mid-1990s under the Clinton administration, and particularly with the war on terror after 9/11, the government has been pumping increasing amounts of money into federal defence and intelligence.

“In an effort to keep the size of the federal government small against security demands, intelligence agencies have effectively created a large ‘shadow government’, people who do its work from the outside,” said Amey. And, the number of contractors like Snowden – who analyse audio, video, photographs, and emails extracted in the name of national security – is getting bigger, he added.

In a report, Security Clearance Determinations, the office of the director of national intelligence revealed that more than one million of its 4.9 million security clearances were awarded to contractors. In other words, non-federal employees had been granted access to classified, and sometimes top-secret, government files.

“Of course the public are shocked now, you realise that things you think are done by the government, by CIA agents, are actually done by contractors,” said John Schindler, a professor of national security affairs at the US Naval War College, who spent a decade working for the National Security Agency (NSA).

A presentation by the agency from 2007 identified contractors as 70 per cent of its intelligence workforce. This figure was first reported by journalist Tim Shorrock, who has written about the growth of contractor dependency in the federal government over the past 10 years.

“Since 2001, intelligence spending has risen about 40 per cent a year and contracting is ballooning by at least that much,” said Shorrock. “If you look at companies like Booz Allen where Snowden worked, some of their financial statements show a 90 per cent revenue from government jobs.”

Budgets are classifiedThe cost of hiring contractors is an issue that both Shorrock and Amey have taken up. US intelligence budgets are classified, as are nearly all intelligence contracts. While researching his book Spies for Hire: The Secret World of Intelligence Outsourcing, Shorrock estimated the overall intelligence budget at $45 billion a year, with private companies getting about 50 per cent of the cut.

According to one ex-NSA official, who asked to remain anonymous, Snowden’s “leak” did more than highlight privacy concerns. “It’s also about corruption,” he said.

“Retired intelligence officials run these contractor companies. They bring in business and people make tons of money – and then they inject some of it into lobbying efforts . . . I just hope that now the system will get some scrutiny.”